Want to Save Taxes on your income but don’t know where to start? This concise Tax Planning Basics posted by Chetan Jain on 9th September 2020 on our FinTalks Facebook Group, will give you some idea about it.
How you guys can save tax on your income?
Let’s talk about some tax planning. All these deductions are for Individual (mostly) & HUF.
Sec. 80C:
Investment in PPF, EPF, Payment of LIC, ELSS, ULIP(MF), Home Loan principal payment & SSY, NSC, SCSS(Mostly all three are of Post Office), Fixed Deposit for Min. 5yrs, Children tuition fees
Sec. 80CCD(1):
National Pension System, Atal Pension Yojana, etc.
Max Deduction allowed for the above two sections is 150K. (I skipped one section, only writing the most familiar one)
Sec. 80CCD(1B):
Investment in NPS upto 50k
Sec. 80CCD(2):
Employer’s contribution towards NPS (up to 10% of salary & DA)
Sec. 80D:
Premium paid for medical insurance
For Self/Wife/Child- upto 25K
For Parents- upto 25K
So total-50K but if age is above 60 then 50K instead of 25K for each one.
Sec. 80TTA:
Interest on savings bank account upto 10K
but if age above 60 then 50K under sec 80TTB.
Sec. 80G:
Donation towards a social cause
Somewhere 100% of the donation and somewhere 50% of the donation.
UPDATE 3rd April 2021: Ashwani Arora added some modifications to the above post:
People do investment in LIC / PPF / Mutual Fund / 5 years FD for upto 1.5L and claim deductions under 80c. Some of them then invest in NPS for claiming 50k additional deduction under 80c.
But there is a condition for claiming this 50k. This is allowed to only those who have invested in NPS amount 1.5L and then again 50k, they can invest more in NPS and claim 2L (1.5L + 50k)
But some think this is an additional exemption of 50k, which is not true.
That’s the basics. You can further Google each of them to know in detail.
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